Outsourcing, Partners & Suppliers

by Cheryl Yeoh (@cherylyeoh), Co-Founder & CEO, CityPockets Inc.
The Founder Institute

Pros of Outsourcing
‡ Talent for startups
± Hire jack of all trades (business) & specialists (tech) ± Do not hire operations people ± Hire interns or get a virtual assistant

‡ Deferral
± Every hire can be disruptive ± Look at budget / employees
‡ how much can you afford?

± Read Netflix & Zappos culture book

Pros of Outsourcing
Saves time & retain culture: (i) specialized areas ± e.g. SEO, PR, etc.) (ii) Outsource boring & noncore stuff

Pros of Outsourcing
More focus on core stuff:

Pros of Outsourcing
‡ Speed to Market
Built v1.0 of CityPockets in 2 mths (part time) $800: Designer from Elance(Pakistan)

Pros of Outsourcing
‡ Speed to Market
Fake it until you make it $0.10 per page For data entry

Cons of Outsourcing
‡ Costs money (per hour)
± $5/hr still costs money

‡ Difficulty & Time Consuming
± Easier for founder to do & management overhead

‡ Where outsourcing fails
± Product, Core Design, Hiring, Marketing, Strategy ± Would use 99designs & elance for prototyping but not to build a company

Outsourcing Decision Matrix
Tasks you can outsource: Repeating, Verifiable, Well-defined, Non-core

One-Time Core Self (e.g. product, ux, hiring, etc)

Repeating Hire (e.g. design, iphone development, customer service, etc) Outsource (e.g. PR, HR & accounting, customer service, data entry, quality check, scrapping, PSDtoHTML, content, etc)

Non-Core

Consult (e.g. scrum process, SEO, logo, CTO, etc )

$800: Prototype
design from Elance (Pakistan)

$0: Design
services from Viget Labs
(sponsored by incubator)

$12,000: Hired
YCombinator preferred designer from Montreal + UX Expert Consultant from NYC

What to use
‡ Solvate (high touch but expensive) - ex McKinsey s who only
want to work for a few hours (ppt. decks)

‡ Elance & Odesk (low touch but cheap)
Tip: Trial first & be as anal as you want to

a lot of engineers

and designers but non successful. Good for data entry.

‡ Usertesting.com for usability tests ‡ Mechanical turk (amazon) ‡ Crowdflower
companies basically an API where at the other end is a person doing research (e.g. 4sq API - hired 10K ppl for 30 mins) experts at mechanical turk; consultant for a lot of

Good place to start
‡ Initial Design ‡ Usability ‡ Feedback
pay non-users $20 (low end testing) and get someone who is a top 1K user to use your site (watch them) hire interns

‡ Data entry / QA ‡ Customer Service ‡ Phone surveying

Lessons from Hiring Contractors
‡ Don t hire friends & family! ‡ Expect all outsourced development or design work to be thrown away later ‡ iPhone & Android Development

CityPockets iPhone v1.0
‡ Vendor: Friend (Yoga App) ‡ Time to Build: 8 weeks ‡ Cost: $14,200 (Budget: $10,000) ‡ Features: Ability to retrieve vouchers stored on CityPockets ‡ Mistakes: Lack of due diligence, detailed SOW, time-sensitive milestones, break-up contracts, daily stand-ups

CityPockets iPhone v2.0

‡ Vendor: TwoToasters (GoTryItOn, GateGuru, BiteHunter, Yipit, etc) ‡ Time to Build: 6 weeks / Cost: $27,450 (@ $150/hour) ‡ Features: Added secondary marketplace (buy & sell)

CityPockets iPhone v3.0

‡ Internal Hire: $70K / year ($12K) + $3,680 for UI & UX ‡ Time to Build: 8 weeks ‡ Features: Added Instant Deals, Yelp Reviews, Add Accounts

Books & Blogs
‡ 4-hour workweek (Tim Ferris is a maniac on outsourcing) ‡ The Goal ‡ Netflix Book ‡ Blog.crowdflower.com ‡ Behind-the-enemy-lines.blogspot.com

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